I'm going to start back to front. There hasn't been this much meat on this post in weeks. Good to see.
First, PCSTEL, I hate to admit it, but you are right on one score. Stock sales and loan proceeds are NOT revenue to satisfy the covenant(s). If G* wants a waiver, it will get a straight one, not play cutesy with the covenant itself.
Thank goodness I only have to concede one point to you. My reputation would be in danger. But seriously, glad to see you catching yourself on the timing of the BS deal and SP's financing, who cares which was "negotiated" first? Maybe the SPs wanted the BS deal done first or in line first before committing the cash. Whatever, SPs have chipped some real coin in. Pre-BK. All at risk.
Now the willy nilly nature that G* is selling the stock is less easily explained. Why raise it now? Remember it's a FIXED AMOUNT OF CASH, NOT AMOUNT OF SHARES. G* is raising $105MM, whether selling 105MM shares @ 1 or 1 share @ $105MM. Whether they sell it now or later when the stock is $20 means diluting shareholders 3% versus 1%, who cares? The only real impact is the "dilution" of the float, i.e. putting out so much more stock into the markets than was previously available. That is harder to digest at this level. But the only reason the money is being raised now is that it's money and can be raised any time and the dilution to the enterprise really doesn't matter.
The reason G* is down is a weaker DAQ and the sales of stock. That's pretty much it. To echo what RcktScntst and Gregg Powers have said, if you liked the business before the financing, you should certainly like it more now. |
